Commodity agreements are agreements between producer and consumer countries to stabilize markets and increase average prices. Such agreements are common in many markets, including the coffee, tea and sugar markets. 12 ibid. 23. The HLTF also argues that international trade should remain focused on « maximizing comparative advantages and not being influenced by subsidies and distortions. » HLTF (n 4) 3. The commodity market is particularly vulnerable to sudden changes in supply conditions, known as supply shocks. Shocks such as bad weather, disease and natural disasters are largely unpredictable and cause high volatility in commodity markets. In comparison, the markets for finished products from these raw materials are much more stable. In the past, trade in raw materials required considerable amounts of time, money and know-how and was mainly limited to professionals. Today, there are more opportunities to participate in commodity markets. There is a great gap between the principles underlying these provisions and the harsh realities of the agreements that were actually negotiated in the post-war period. The U.S.S.R. continues to vote on the international sugar agreement and the international wheat agreement as an exporting country, although the dynamism of international trade is such that it has recently become a major net importer of both countries.
In the present circumstances, the United States, although not itself a member of the ITA, is in fact setting a ceiling for international tin prices by regulating the rate at which tin disposals are produced from that country`s strategic stocks. In the case of wheat, too, the international market was less dominated by IWA than by the oligopolistic pricing practices of the Canadian Wheat Board and the U.S. Commodity Credit Corporation. The membership of a large number of nations in the current international agreements on raw materials can only complicate administrative and decision-making processes, whereas in at least one case – the UK`s decision not to side with the 1953 IWA – the absence of a major wheat-importing country could have had a beneficial effect in moderating the exercise of oligopolistic power. Most of the commodity trade is in future delivery contracts. The purpose of futures trading is either to insure against the risk of price change (coverage) or to make a profit by speculating on price developments. If a speculator believes that prices will go up, he buys a futures contract and sells it if he wants it (z.B. at a later delivery date). The speculator either wins (when prices have risen) or loses (if they have fallen), the difference is due to the price change.
33 Commodity exchange is a contract whereby both parties to the agreement agree on the exchange of cash flow that depend on the price of an underlying product. Negotiations for a successor itA agreement in 1994 were concluded in 2006 and the new agreement (ITTA 2006) is expected to intensify efforts to promote tropical timber trade in the framework of sustainable tropical forest management. One special case is the Organization of the Petroleum Exporting Countries (OPEC), established in 1960. So far, it has unchallengedly violates the provisions of the Havana Charter that impose consumer representation. It uses a collective bargaining process – not with importing countries, but with production and marketing companies, most of which are controlled by citizens of advanced industrialized countries, particularly in the United States, the United Kingdom, the Netherlands and France. Perhaps ripe for a true international oil company. An internal distribution system in the United States, on behalf of domestic producer groups, has already led to a system of import controls and it is argued forcefully that import quotas should be imposed by multilateral rather than unilateral instrumentality.